Crunching The Numbers

Lately, it seems that a day doesn't go by without me receiving a comment or an email from somebody complaining about how they're "still getting their butt kicked in silver because they bought in April of 2011". Since I've consistently advocated the regular stockpiling of physical metal for over two years now, I thought it might be fun, and worth the time, to crunch some numbers to see just how bad it could be for some folks.

First of all, I don't think that anyone whose only purchases of silver came in April of 2011 is still a regular reader of this site. Additionally, that this disgruntled, non-reader of the site would then take the time to email me seems a little far-fetched. Nonetheless, let's roll with it.

Below is the hard data. I began this blog/site on 11/11/10, so, let's measure two things:

A Turdite who decided, based upon my strong convictions, to purchase a tube of eagles every two weeks, regardless of the cost.

A Turdite who decided to take $500 out of his/her paycheck every two weeks to purchase as many Eagles as $500 would buy, based upon the current price.

I have not included premiums or sales tax. I'll let you adjust and figure that out for yourself.

DATE PRICETUBE COST OROUNCES BOUGHTCOST

11/12/10 25.94 $518.80 19 $492.86

11/26/12 26.70 534.00 18 480.60

12/10/10 28.58 571.60 17 485.86

12/24/10 28.88 577.60 17 490.96

1/7/11 28.66 573.20 17 487.22

1/21/11 27.42 548.40 18 493.56

2/4/11 29.06 581.20 17 494.02

2/18/11 32.30 646.00 15 484.50

3/4/11 35.32 706.40 14 494.48

3/18/11 35.06 701.20 14 490.84

4/1/11 37.74 754.80 13 490.62

4/15/11 42.57 851.40 11 468.27

4/29/11 48.58 971.60 10 485.80

5/13/11 35.01 700.20 14 490.14

5/27/11 37.86 757.20 13 492.18

6/10/11 36.33 726.60 13 472.29

6/24/11 34.64 692.80 14 484.96

7/8/11 36.54 730.80 13 475.02

7/22/11 40.11 802.20 12 481.32

8/5/11 38.20 764.00 13 496.60

8/19/11 42.43 848.60 11 466.73

9/2/11 43.02 860.40 11 473.20

9/16/11 40.78 815.60 12 489.36

9/30/11 30.04 600.80 16 480.64

10/14/11 32.14 642.80 15 482.10

10/28/11 34.07 681.40 14 476.98

11/11/11 34.67 693.40 14 485.33

11/25/11 31.01 620.20 16 496.16

12/9/11 32.17 643.40 15 482.55

12/23/11 29.04 580.80 17 493.68

1/6/12 28.65 573.00 17 487.05

1/20/12 31.65 633.00 15 474.75

2/3/12 32.73 654.60 15 490.95

2/17/12 33.20 664.00 15 498.00

3/2/12 34.48 689.60 14 482.72

3/16/12 32.57 651.40 15 488.55

3/30/12 32.47 649.40 15 487.05

4/13/12 31.38 627.60 15 470.70

4/27/12 31.35 627.00 15 470.25

5/11/12 28.86 577.20 17 490.62

5/25/12 28.37 567.40 17 482.29

6/8/12 28.46 569.20 17 483.82

6/22/12 26.66 533.20 18 479.88

7/6/12 26.89 537.80 18 484.02

7/20/12 27.28 545.60 18 491.04

8/3/12 27.79 555.80 18 500.22

8/17/12 28.00 560.00 17 476.00

8/31/12 31.37 627.40 15 470.55

9/14/12 34.60 692.00 14 484.40

9/28/12 34.52 690.40 14 483.28

10/12/12 33.63 627.60 14 470.82

10/26/12 32.01 640.20 15 480.15

11/9/12 32.59 651.80 15 488.85

11/23/12 34.11 682.20 14 477.54

If you had purchased a tube of Eagles every two weeks since this blog/site began, you would now own 54 tubes or 1080 ounces of silver. This would have cost you $35,524.80 and your average cost per ounce would be $32.89.

If you had decided to, instead, buy $500 worth of Eagles every two weeks since this blog/site began, you would now own 810 ounces of silver at an average cost of $32.29.

If you came late to the party and only began your tube-every-two-weeks extravaganza on 4/15/11 with the price at $42.57, you'd now own 860 ounces at an average cost of $33.50/ounce.

What if you only bought a tube on 4/15/11 and 4/29/11 and then took the summer of 2011 off? You were then lured back in by the S&P downgrade of 8/5/11 but scared off again after the steep drop in September. Convinced we'd seen the lows by late 2011, you then bought a tube every two weeks in 2012. If so, you'd have 600 ounces of silver at an average cost of $33.23/ounce.

Maybe you did precisely as above, buying only six times and on those exact same dates in 2011. Then you only restarted buying just as price peaked in late February of this year. You'd now own 520 ounces at an average cost of $33.49/ounce.

And what if you're just the unluckiest sap on the planet. Dumb as a box of rocks and easily duped into buying only when ole Turd gets over-the-top excited. You made just 12 purchases and you bought on 4/1/11, 4/15/11 and 4/29/11, 8/5/11, 8/19/11 and 9/2/11, 2/3/12, 2/17/12 and 3/2/12, 8/31/12, 9/14/12 and 9/28/12? In that case, you'd be the proud owner of 240 ounces of shiny silver at an average cost of $37.78.

Feel free to fiddle with these numbers as much as you'd like. Construct your own best case and worst case scenarios. Add in an acceptable dealer premium and your local sales tax. Whatever. Have fun with it. The point is this:

Your best strategy is to be consistently buying physical metal, either gold or silver, regardless of price. Sometimes you'll buy high and sometimes you'll buy low. Most importantly, however, you'll be slowly accumulating a sizeable position in the only assets guaranteed to protect your savings and purchasing power against the constant devaluation of the dollar, brought upon us by our politicians and bankers.

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303 Comments

My overall DCA for silver is $37.85... yeah, I was "that guy" a few times. My purchases were sporadic, and I bought lots at the "wrong" times. Oh well.

My 2010 Average buy price was 29.24

My 2011 Average buy price was $40.03

My 2012 Average buy price (so far) is $35.04

Do I care? Not really. Yes, I got a bit excited in August of 2011 and bought when I should have held, oh well. I'm older and wiser now.

I also have bought a few "numismatics" that were way overpriced. Of course, I knew that, I just wanted a few "pretty" coins, so I don't consider those as much an "investment" as the rest. I could recalculate to remove those, but frankly, that's probably only 10 or 15 ounces out of the lot, so it won't affect the averages much.

I never expected to sell soon anyway, I will hold until until all those folks who tell me I'm crazy start asking me how to buy the stuff, then I'll start considering when to exit this investment and change it all to gold and/or land. By my calcuations, given the current premiums, I'm down about 5% overall on silver. But my thesis from early this year still holds true: Any PM's I've held longer than 2 years are above water, significantly so. It's only the stuff from mid-2011 (and a few ounces I bought in September this year) which are under water.

Funny, every ounce of gold I've ever bought is showing a profit (and has been almost all year). Of course, I don't buy that as often, even though I have more fiat sunk into gold than silver at this point.

I've also converted all my 401K assets into the sprott funds over time. They're about the same averages as my physical.

Turd's got me thinking, though, maybe I should go on the bi-weekly or monthly purchase plan... Looks like a winner overall, and less excitement.

But I'm a true believer in the end of the great keynesian experiment, so I'm holding fast, and have no ill will toward folks like Turd, just the opposite, in fact.

Keep Stackin'!

ETA: I guess this means I'm one of the "Dumb as a box of rocks" guys!!! LOL!

Suppose you decided to start a long term savings plan denominated in silver. And suppose you started at the worst time, bought $3,000 of 90% silver at each year’s high, and over paid. 33 years later (but not including this year)...

Runs some chart website with some pretty cool charts, has free 3 week membership or something like that. Also has really interesting free charts that are hard to find, my computer broke a few weeks ago so I don't have links (except intraday one below that was in one of my emails) until I load data from old broken computer to new computer, which I really hope arrives tomorrow, going through really bad charting withdraws.

Many of us find it difficult to determine if gold and silver are correctly valued today. One would suspect that corn, pork bellies or cocoa are as they trade in open markets with many participants on the long and short side. The precious metals may be different. As they have been mediums of exchange and valuation in the past, there is reason to suspect today that the true pricing is unknown because of covert manipulation of prices. Thus we may not safely assume that the relative value of silver or gold to houses, food, gasoline, etc. will remain the same in coming years. If the prices of the precious metals are suppressed, then purchases today may leap in value far beyond suspected inflation rates into the future. One might also investigate comparative suppression between gold and silver. Today the ratio is north of 50; yet the elements appear in nature from 16 to 10 to 1. If the ratio of the elements in the earth's crust returns, then buying silver today is a levered bet. The fact that silver is consumed in manufacturing increases the leverage. If one is comfortable with counterpart risk, then purchases of futures, options and mining shares, are traditional ways of securing leverage. But, unknown events could already be providing leverage.

That would be my wife. In which are you really interested on main street? My wife will be putting out the information tomorrow. By the whey(pun intended) father and grandfather cheese makers.

sorry off topic should have went to churning or still churning I apologize. ok thats butter. oldtimers kicking in again

for old time cheese recipes lets keep it off main street. Pm me If your interested its alot of different processes to get just one cheese. Therefore I believe I will have my wife in contact with katie rose for her specifics and katie can share the results with every body.

What's wrong with you? Don't you know that no one is responsible for his own actions in today's America? It must be someone else's fault, no matter what. Oh, wait, I see you live in Texas. Now I understand.

Bill Murphy recently reiterated that the silver scandal *may* break before xmas. I know you have been extremely consistent with your optimism, though frustrated by the timing. Have you heard anything along the lines of Murphy's most recent interview? I think it was on unconventional finance or something.

Having lived in NJ, PA, WV, OH, and TX, and having traveled all over the damn place, including a lot of time in Europe and Asia, I really do believe TX is one of the best places to live. If you get a chance to live here, it is well worth considering. Great cost of living, no state income tax, above avg government hacks.... Although, the way things are going, Americans might need a passport to come here soon..........

Investment demand for silver often takes center stage, but industrial demand should not be overlooked. In 2011, industrial demand was strong for the first three quarters, but then saw close to a 4 percent decline and fell sharply towards year end. A newly released report5 from Thomson Reuters GFMS states that the Silver Institute commissioned GFMS to conduct an investigation against a backdrop of uncertainty carried over from 2011 to 2012. The results reveal a decline and recovery cycle that will see industrial demand reach a new high in 2014.

GFMS states that not only does the industrial sector play an important role in consumption, but it is also crucial in offsetting the declining use of the white metal in photography and silverware. These two segments accounted for over one-third of silver fabrication demand in 2000, but fell to only 13 percent in 2011.

At the turn of the the millennium, industrial offtake of silver was 383.3 million ounces (Moz). Over the past decade, demand has risen on all but two occasions. The bursting of the dot-com bubble led to a pronounced drop in 2001, although a recovery phase quickly emerged the next year, notes GFMS.

Then in 2009, there was a recession-induced decline that eclipsed that of 2001. Again, recovery was seen the following year. In 2010, industrial demand hit a new record high of 499.6 Moz.

One of the questions the Silver Institute aimed to answer in commissioning the report was whether current conditions will be a repeat of 2009′s downturn. The GFMS report reveals similar conditions are at hand.

With an expected decline of 6 percent in 2012, industrial demand will fall to about 454.4 Moz, states GFMS. Recovery is expected to begin as we approach year end and should carry over into 2013. Modest growth next year should boost offtake to 484 Moz. In 2014, GFMS forecasts a further rise of about 6 percent, paving the way to a new record high of 511.6 Moz.

Drivers of rising industrial demand

One of the factors driving the forecasted improvements is demand for ethylene oxide. The production of that and other intermediaries will help the US run counter trend to other industrialized nations, which GFMS predicts will see slow growth.

The largest end use of silver is the wide-ranging electrical and electronics sector, states GFMS.

“The most rapid growth in these sectors is set to come from emerging markets such as India and China, where rapid advances in living standards mean such products have become increasingly more affordable as well as desirable.”

In absolute terms, GFMS expects China to achieve successive record highs in terms of its industrial offtake of silver over the forecast period....

Ted Butler says JPM holds 34% of the short OI in silver. The CME can work around the force majeure at Manfra by delivering from other vaults, but there is a lot of gold in Manfra and the OI on Comex that could stand for delivery is huge. Turkey is getting Lira from Iran and buying gold for Iran. All this and more on the Harvey Report: https://www.tfmetalsreport.com/comment/580721#comment-580721

Very near melt value, as a Christmas gift for the family. Plan on using it every day. I'm hoping for some health benefits. Maybe it will have a placebo effect. Regardless, it's my way of looking at 'the shiny' daily. Still looking for some decent goblets to use daily. I got sniped on two beauties tonight on ebay. Anybody else use silverware or cups daily?

Prepping cost more money than I thought..........While PM's are at the top of the list, so are guns and ammo, these cost are rising as ammo is once again on a springboard. Just a few months ago I could by the ML855 for the AR's for less than 150 a can, now you can't buy half of that for the same money.

My gun stacking cost is just under my PM cost, not to mention the amount of ammo I have bought to keep up, puts it over the top......reloading cost is also on the rise. What do ya do, spend 30k on guns and ammo to help protect your 25k in PM's, 6k+ in food, then you have bows and arrows.....a good arrow will set you back 20+ per......cold weather gear add in another 3-5K.........this list never ends, as does the nagging from the little lady thinking I lost it.

At least I hit the last big silver purchase over the summer at around 600 per tube, and have since converted that into 90%...........for some reason I keep diverting to 90%, I just have a feeling this is where I should have most of my silver.....for the Numi value in case we are all wrong (sarc mostly). I am now at 30+ in my .999 and around 19-20 in my 90%,just more oz's for the money in 90% for me.

Bottom line..........prepping ain't cheap even if you have an extra grand a month, but it's just gonna keep going up as inflation takes hold.

People need to realize that gold and silver are more likely to increase from debt ceiling increases as opposed to QE. You need to understand that there are probably 2-3 hundred trillion Federal Reserve notes floating out in the world. This means the Fed could print 20 trillion a year with maybe 10% inflation.

Hyperinflation is not a certainty. Hyperinflation needs a rather small monetary base to begin with. Something that can double or triple in about a month. The Federal Reserve note doesn't qualify as being a part of a small monetary base. People need to chill out. We have a lot more time before economic collapse, 5-10 years, to prepare. Keep stacking STEADILY. Don't freak out. Learn a trade. Learn to grow food and raise some chickens. Educate others carefully and be happy.

several years ago, i found a sterling "ewer" or water pitcher that was engraved as a gift to a canadian banker on his retirement. evidently he (or his heirs) had sold it, and it ended up in a second hand store. i jumped on it at a price a little under melt at the time (about $5.00/oz). it has been a kitchen fixture ever since. it holds just enough water to fill my coffee maker. it sits, full of water on the stove to add to whatever i'm cooking. i don't know if there are any health benefits due to the ewer, ....but i haven't had many colds lately.

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DISCLAIMER: The charts and analysis provided here are not recommended for trading purposes. Trade at your own risk. The Turd provides knowledge not direction. Turd holds no liability for your trades and decisions but he's happy to take credit when credit is due, particularly through the "donate" button. Read more...